Stairway to Patanjali

No one could have imagined in 2006 that a small scale Ayurvedic store, driven by a celebrity Yoga preacher, would take the FMCG sector by storm within a decade with a stupendous growth rate of 130% and revenue of Rs 10,561 cr (The Economic Times). Patanjali Ayurved Limited (PAL) is the third largest FMCG Company after HUL and ITC in India. American business magazine Fast Company ranked Baba Ramdev 27th in its list of “Most Creative Business People of 2016”, while the CEO, Acharya Balkrishna, has made his debut on the Forbes list of India’s 100 Richest People, at 48th position (he owns 94% of the company). PAL is the talk of boardroom discussions and topic of research and case studies at Management schools. All these factors cumulated, over a short course of time, to create a wave of worry, awe, appreciation, disdain, confusion as well as controversies for this unlisted public company.

Patanjali shattered the norms and conventions of doing business (the corporate way) in multiple avenues. It is, thus, of great interest to various stakeholders to analyse the journey of Patanjali and all that it did out of the box. Some of these are:

• The company struck the hammer at a very favourable and interesting time – just when the society had started realizing the ill effects of western influences like sedentary lifestyle and artificial products. Moreover, as Baba Ramdev had already built a strong follower base from yoga, branding became easy and cheap. Initial investment came in the form of investments from NRIs Sarwan and Sunita Poddar, as well as locals, such as, Govind Agarwal; which in turn helped PAL get bank loans. (Business Today)
• Payment of no dividend to shareholders made it possible to pump profits back into future investments.
• Developed a large, trustworthy system of vendors and distributors to ensure product availability all over India.
• Experimentation with products of various sectors; funnelling down to products with high sales instead of spending extensively on marketing few products.
• Support of the ruling party in states like Uttar Pradesh, Maharashtra, Madhya Pradesh for expansion.

But all is not a fairy tale here. Louder buzz calls for even louder controversies. A lot of fingers are being pointed at Patanjali; be it the Nepal Government or the Defence canteen stores banning products like medicines and Amla juice, respectively, or the issue of funding transparency raised by many industry stalwarts. PAL’s reply was that Patanjali is WHO, GMP, GLP, ISO certified and that maintaining quality is their primary concern. Moreover, funding is not a problem for them, as being the fastest growing FMCG Company ensures relatively easier private investments as well as bank loans.

The general outlook towards Patanjali was put very interestingly by The New York Times, describing Baba Ramdev as, “An Indian, who built Yoga Empire … a product and symbol of the New India, a yogic fusion of Richard Simmons, Dr. Oz and Oprah Winfrey, irrepressible and bursting with Vedic wisdom.” But it is only time that can tell whether their exponential growth will continue or whether competitors like HUL, P&G etc. will be able to prune the accelerated growth of PAL.

Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of IndusGuru Network Partners